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Technology Stocks : Compaq
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To: Nadine Carroll who wrote (10752)12/10/1997 5:29:00 PM
From: hpeace   of 97611
 
Nadine, cpq will reserve for any over stking and for any projected 1 qtr rebates they think they need to do in order to move inventory.
But, 4qtr is going to be huge so this is good.
You don't want 4qtr so big that 1q98 cannot sequentially be better.

We want it to look like this:

X
X X
X X X
X X X X
X X X X X
X X X X X X
X X X X X X X
X X X X X X X X
X X X X X X X X
X X X X X X X X
X X X X X X X X
Q Q Q Q Q Q Q Q
1 2 3 4 1 2 3 4
1997 1998

NOT THIS

X
X
X X
X X X X
X X X X X
X X X X X X
X X X X X X X
X X X X X X X X
X X X X X X X X
X X X X X X X X
X X X X X X X X
Q Q Q Q Q Q Q Q
1 2 3 4 1 2 3 4
1997 1998

Notice how a blow out makes the 1q98 results look like there is a problem. but, their isn't since that qtr has allot of growth in it when seasonally compared. In fact it might have been 100% yr to yr growth but it was lower than cpq's 4q which is normally their strongest so, it gives the analyst something to talk about and bash the stk with. There is no sense giving the analyst a hammer to bash you with.

Cpq will use creative but legal accounting to accurately reflect the truth about sales.

Reports seem to indicate that october was 70-80% increase in sales and november was just as strong with cpq saying dec is strong too.
I actually think that when Mason delivered his speak last friday that demand was great...he had just come out of the meeting that indicated what 1997 would look like. They know plus or minus a million already.
If you think about it. He's new and to say things are fantastic,
declare another 2-1 split, give out a dividend, continuously say we are going to be 50b compnay in 2000.....
To do all this and report poor 4q results makes him look pretty stupid.
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